OIL FUTURES:Crude Up On Weaker Dlr, Demand After OPEC Meeting

MaxLin

SINGAPORE (MarketWatch) -- Crude oil futures rose in Asia Thursday amid a weaker dollar and signs of recovering demand after the Organization of Petroleum Exporting Countries decided to keep its production steady, as widely expected.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in October traded at $72.34 a barrel at 0703 GMT, up $1.03 in the Globex electronic session. October Brent crude on London's ICE Futures exchange rose 76 cents to $70.59 a barrel.

Dollar weakness is supporting oil prices, and oil will likely continue taking cues from the currency market, said Mark Pervan, head of commodity research at Australia and New Zealand Banking Group.

"It's a very dollar-centric market right now," he added.

Investors who were using the dollar as a stable spot in which to stash funds during the recession have flocked to riskier assets this week, with oil close to the top of the list. Also, given that oil is traded in dollars, it typically gains when the value of the currency falls.

Meanwhile, signs of recovering demand also served as an excuse for bulls.

The American Petroleum Institute, an industry group, reported a 7.2-million-barrel drop in oil inventories, higher than analysts' expectations of 1.5 million barrels.

The API data often sets the tone for trading before the release of Department of Energy figures - scheduled at 11 a.m. EDT Thursday - even though the government sometimes reports wildly different results.

Meanwhile, the International Energy Agency is expected to provide more support for the optimistic take on future demand with its monthly oil report later Thursday. The IEA is seen increasing its oil demand forecast with the global macroeconomic outlook improving.

OPEC earlier said it will keep its crude oil production steady. The widely-expected decision didn't have any visible impact on the market as it has long been priced in, said market participants.

Behind the scenes, members of the group also pledged to trim excess supply by improving their adherence to existing output quotas.

But it could be difficult for the group to return to the 80% compliance seen earlier this year, as cuts would hurt oil revenue for the poorer member countries, said Ryuichi Sato, analyst at Mizuho Securities.

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